It is an obligation, beyond that required by the law and economics, for a firm to pursue long term goals that are good for society.CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as that of the local community and society at large. It is about how a company manages its business process to produce an overall positive impact on society

Corporate social responsibility is about the integration of social, environmental, and economic considerations into the decision-making structures and processes of business. It is about using innovation to find creative and value-added solutions to societal and environmental challenges. It is about engaging shareholders and other stakeholders and collaborating with them to more effectively manage potential risks and build credibility and trust in society. It is about not only complying with the law in a due diligent way but also about taking account of society’s needs and finding more effective ways to satisfy existing and anticipated demands in order to build more sustainable businesses. Ultimately, it is about delivering improved shareholder and debt holder value, providing enhanced goods and services for customers, building trust and credibility in the society in which the business operates, and becoming more sustainable over the longer term.

While there are different ways to frame the benefits of CSR in business because they are interrelated, they generally include the following:

• stronger financial performance and profitability through operational efficiency gains
• improved relations with the investment community and better access to capital
• enhanced employee relations that yield better results respecting recruitment, motivation, retention, learning and innovation, and productivity
• stronger relationships with communities and enhanced licence to operate
• improved reputation and branding

The most recent and comprehensive review of the relationship between financial performance and socially responsible business practices in large companies is by Margolis, Elfenbein, and Walsh (2007). In a meta-analysis of the results from 167 studies, they found that 27% of the analyses show a positive relationship, 58% show a non-significant relationship, and 2% show a negative relationship. They argue that the evidence indicates that CSR, in general, has little effect on profitability, but note that there is stronger evidence to suggest that some causality does operate in the opposite direction: companies that are profitable are more likely to engage in more CSR activities.

Reducing waste and emissions doesn’t just help the environment – it saves money too by cutting utility bills and waste disposal costs, thus bringing immediate cash benefits. However, consider these other benefits as well:

• Building a reputation as a responsible business sets a company apart.
• Many consumers prefer to buy from ethical businesses.
• Some customers don’t just prefer to deal with responsible companies, but insist on it. For example, sales of ‘environmentally friendly’ products continues to grow – and these products often sell at a premium price.
• Companies often favor suppliers who demonstrate responsible policies as this helps them to minimize the risk of any damage to their own reputations.
• A good reputation makes it easier to recruit employees.
• Employees stay longer, reducing the costs and disruption of recruitment and retraining.
• Employees are more involved and motivated and, as a result, they’re more productive.
• CSR helps ensure compliance with regulatory requirements.
• Involvement with the local community creates ideal opportunities to generate positive press coverage.
• Good relationships with local authorities make doing business easier.
• Understanding the wider impact of a business can help in thinking up profitable new products and services.
• CSR can make firms more competitive and reduces the risk of sudden damage to their reputation and sales. Investors are more willing to provide financial resources to such firms as a result.

“The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well.”

CSR As An Investment

CSR can be viewed by businesses as a form of investment that helps to differentiate a company and its goods and services.

What then is the right way to look at CSR as an investment – particularly given that it frequently involves intangible and less quantifiable domains. The bottom line is that a prudent business may tend to regard CSR in the same way it treats most investment decisions. It would be inclined to use the same systematic approach to assess the anticipated benefits and related revenues relative to the costs that it employs for investment proposals. A rigorous and systematic approach to CSR investment is likely to yield the most positive results for both the business and society as it is likely to demonstrate the most efficient allocation of resources from the perspective of both the firm and society.

There are many different areas where a firm can invest to develop CSR attributes (e.g. human resource management, environmental protection, health and safety, community involvement, etc.). Investment decisions on CSR need to take account of various factors and parameters as well as the anticipated cost and benefit stream to be produced by the investment.

CSR is about the organization’s obligations to all stakeholders – and not just shareholders.

There are four dimensions of corporate responsibility:

• Economic – responsibility to earn profit for owners
• Legal – responsibility to comply with the law (society’s codification of right and wrong)
• Ethical – not acting just for profit but doing what is right, just and fair
• Voluntary and philanthropic – promoting human welfare and goodwill
• Being a good corporate citizen contributing to the community and the quality of life

The corporate responsibility view:

• Businesses do not have an unquestioned right to operate in society
• Those managing business should recognize that they depend on society
• Business relies on inputs from society and on socially created institutions
• There is a social contract between business and society involving mutual obligations that society and business recognize that they have to each other

The basic premise is that business organizations have responsibility to various groups in society (the internal and external stakeholders) and not just the owners/ shareholders. The responsibility includes a responsibility for the natural environment and Decisions should be taken in the wider interest and not just the narrow shareholder interest

        1) What motivates you to take up the ECL task?

Aditi Jain
Senior Undergraduate,
Aerospace Engineering,
IIT Bombay

Join Us:

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In recent years CSR has become a fundamental business practice and has gained much attention from the management of large international companies. They understand that a strong CSR program is an essential element in achieving good business practices and effective leadership. Companies have explored that their impact on the economic, social and environmental sector directly affects their relationships with investors, employees and customers. Although the prime goal of a company is to generate profits, companies can at the same time contribute to social and environmental objectives by integrating corporate social responsibility as a strategic investment into their business strategy.

A number of companies with good social and environmental records indicate that CSR activities can result in a better performance and can generate more profits and growth. In India there are an existent but small number of companies which practice CSR. The Tata and Birla group companies which have led the way in making corporate social responsibility an intrinsic part of their business plans. These companies have been deeply involved with social development initiatives in the communities surrounding their facilities. TATA’s CSR activities in Jamshedpur include the provision of full health and education expenses for all employees and management of schools and hospitals.

In spite of having such life size successful examples, CSR in India is not practiced on a large scale in India. Thus in order to be more successful and to earn huge profits companies in India should undertake CSR. In order to be a successful Corporate Social Leader one should do the following things:

1. Confronting the Issues
2. Believing in the possibility of change
3. Taking on the responsibility of change
4. Get the best people around you
5. Putting up the company’s plans of CSR to action.

As to standard definition “Social impact assessment includes the processes of analyzing, monitoring and managing the intended and unintended social consequences, both positive and negative, of planned interventions (policies, programs, plans, projects) and any social change processes invoked by those interventions. Its primary purpose is to bring about a more sustainable and equitable biophysical and human environment.”

We take the view that every social enterprise and voluntary organization from the smallest to the largest can be measuring their social impact. Long gone are the days when just saying that we were doing a ‘good thing’ would secure any funding. Today, quite rightly, funders and investors want to know that the investment they make is going to be making a real difference.

There has been a lot of discussion over the last few years about measuring the social impact that social enterprises and other Third Sector organizations are making.

Funders, government, investors and corporate bodies are interested in making sure their investments have the greatest impact possible and are looking for ways measure this.

But this is not the only reason why it is good to measure our social impact. The real benefits from this process are those that are created for the organization itself – not the funders that support it.

If we, in the sector, found a way to tell the whole story of the impact we are having – not just a series of numbers about how many people walked through our doors – we would have an incredibly powerful tool that would:

-enable us to improve our credibility and encourage people to believe what we say

-inspire and motivate our staff and volunteers

-encourage us to continuously improve our services

-communicate to other stakeholders how great we are

-form the basis of effective and powerful publicity materials, funding applications and press releases.

This is the real power of measuring our social impact – enabling us to market our organizations, inspire our staff and volunteers and attract more funding and investment.

At The Tool Factory we work with organizations of all sizes from the smallest community groups, to the largest of national organizations, from pre-start ups to well-established charities that have decades of stories to tell.

We believe that each one of these organizations can be measuring their social impact – however small or new they are.

Different sizes and types of organizations will require different tools. However, if we take the approach that as an organization grows and develops it can build additional complexity into the social impact measurement system that it is using to meet its new needs as a larger, more developed organization.

For example, a small local social enterprise may find the SROI (Social Return on Investment) tool is not appropriate at the current time. But if they introduce a Social Accounting model now, then when they grow and become more sophisticated as an organization they can build on the model they are already using and introduce the additional concepts of the SROI approach.

For small organizations we often suggest that they start by measuring just one indicator – maybe related to one activity they are running; just to get them started. Once the organization is used to this they can then add more indicators and grow their social impact measurement model.

In fact, if we can encourage all new organizations to build social impact measurement into their organizations right from the very start we will, over time, have a sector in which social impact measurement and reporting is the norm.

Let’s just get every organization started on doing some level of social impact measurement – we can build on it from there.

As to standard definition “Social impact assessment includes the processes of analysing, monitoring and managing the intended and unintended social consequences, both positive and negative, of planned interventions (policies, programs, plans, projects) and any social change processes invoked by those interventions. Its primary purpose is to bring about a more sustainable and equitable biophysical and human environment.”

We take the view that every social enterprise and voluntary organisation from the smallest to the largest can be measuring their social impact. Long gone are the days when just saying that we were doing a ‘good thing’ would secure any funding. Today, quite rightly, funder and investors want to know that the investment they make is going to be making a real difference.

There has been a lot of discussion over the last few years about measuring the social impact that social enterprises and other Third Sector organisations are making. Funders, government, investors and corporate bodies are interested in making sure their investments have the greatest impact possible and are looking for ways to measure this. But this is not the only reason why it is good to measure our social impact. The real benefits from this process are those that are created for the organisation itself – not the funders that support it.

If we, in the sector, found a way to tell the whole story of the impact we are having – not just a series of numbers about how many people walked through our doors – we would have an incredibly powerful tool that would:

-enable us to improve our credibility and encourage people to believe what we say

-inspire and motivate our staff and volunteers

-encourage us to continuously improve our services

-communicate to other stakeholders about the work done

-form the basis of effective and powerful publicity materials, funding applications and press releases.

This is the real power of measuring our social impact – enabling us to market our organisations, inspire our staff and volunteers and attract more funding and investment.

At The Tool Factory we work with organisations of all sizes from the smallest community groups, to the largest of national organisations, from pre-start ups to well-established charities that have decades of stories to tell. We believe that each one of these organisations can be measuring their social impact – however small or new they are.

Different sizes and types of organisation projects will require different tools. However, if we take the approach that as an organisation grows and develops it can build additional complexity into the social impact measurement system that it is using to meet its new needs as a larger, more developed organisation. For example, a small local social enterprise may find the SROI (Social Return on Investment) tool is not appropriate at the current time. But if they introduce a Social Accounting model now, then when they grow and become more sophisticated as an organisation they can build on the model they are already using and introduce the additional concepts of the SROI approach.

For small organisations we often suggest that they start by measuring just one indicator – maybe related to one activity they are running; just to get them started. Once the organisation is used to this they can then add more indicators and grow their social impact measurement model.

In fact, if we can encourage all new organisations to build social impact measurement into their organisations right from the very start we will, over time, have a sector in which social impact measurement and reporting is the norm. Let’s just get every organisation started on doing some level of social impact measurement – we can build on it from there.

-  Anisha Bhatia

Social media monitoring is not just about listening to its people it has many key elements attached with it like:

It discovers conversations and activities in real time, it not only measures trends but also analyze it, it understand demographics main geo locations of activities, it also evaluates positive and negatives effects and identifies the key leader and opinion maker. Thus social media monitoring has a wide coverage under it as it covers many dimensions.

The business of social media monitoring The key factors that seem to have held social media monitoring back are:

1. Social media monitoring only reports what people are talking about, if they are not talking about you, or if they are not talking about the issue you need to research, then it does not solve the problem.

2. Social media monitoring is much more expensive than was expected, even to monitor a few brands and terms across a few markets is likely to cost several thousand dollars a month.

3. The widely perceived need to use manual coding has held back the credibility of social media monitoring and made it slower and more expensive.

4. Many of the areas where social media monitoring is strong, such as measuring reactions to experiences and advertising are areas where research buyers are very conservative, preferring to stick with their tried and trusted brand and customer satisfaction trackers.

5. The lack of knowledge about what the results of social media monitoring mean become apparent when companies start to use it. Comments from different parts of social media (e.g. Face book, blogs, and Twitter) often produce different findings, using different search terms often produces different results. There is a feeling that the results need to be merged to make them more representatives, but merged in what proportions? And, what are the merged result representative of?

However, social media monitoring is establishing a base within market research, and an even bigger one outside. Most brands recognize that they need to monitor what people are saying about them, even if they can’t use that process to replace other research.

It is likely that the cost of social media monitoring will fall, as software improves, and as competition between the large number of providers increases, this will increase the use of social media monitoring tools for both research and non-research purposes.

Social media monitoring follows three basic steps firstly it listen to its audience by determining relevant real time conservations and in its second step includes monitoring in which those conservations are analyzed and tracked and lastly it engage its customers dialogue comments for further use.

Maybe for few of us words like radian 6, techrigy SM2 etc sounds vague as we don’t have knowledge in these sphere but these are the top social media monitoring instruments.

The power of reputation is a key to success for any brand as there goes a famous saying:

IT TAKES 20 YEARS TO BUILD REPUTATION AND 5 MINUTES TO RUIN IT…..

Social media monitoring as a major role in building a reputation of a brand in its audience mind thus for any organization this factor should be the first priority as without this a brand in market cannot survive. The brands future lies with social media monitoring thus the better it is the successor the brand will get.

- By Anisha Bhatia

For a beginning, we shall start with MFI’s and every week we would explain each term in details.

MFI’s or Micro Finance Institutions, are organisations that provide financial products and services, including loans, savings, insurance, transfer services and other financial instruments targeted at low-income clients.

Yeah, we heard you ! That was jargon ! To put it simply – MFI’s provide credit/loan/savings to people who need the money but have no/poor/limited access to proper Banking Credit channels. They may utilize the money to start new activities that may provide them with a regular income, reduce the risk of them being jobless when there is a natural calamity or sickness and support self empowerment.

MFI’s are the primary players in the Indian Micro-Credit Market and the numbers are simply mind boggling. To quote a CRISIL paper on the growth of MFI’s in the country, there is a demand for upto 1.2 Trillion INR. That translates into a whopping US$ 24 Million, a whole new economy unto itself ! As per popular literature available, there are 8 Microfinance Lending Models.

We will not go into the details of the models, but will provide a small information on how the model works.

1.) Associations – Self Help Groups are a typical example.

2.) Bank Guarantees – where a government agency guarantees the microloans made by a MFI or Bank to an individual or a group of borrowers.

3.) Community Banking – Grameen Bank is a good example.

4.) Co-operatives – Very similar to Associations and Community Banking except that the targeted population falls into the middle and upper class individuals.

5.) Credit Unions – Members come together, pool their money and make loans to one another at low interest rates. These are usually smaller than Community Banks, and charge minimal interest rates.

6.) Non Governmental Organizations – External Organizations whose activities differ from offering microfinance services to training/education and research.

7.) For-Profit Banks – Commercial Banks that offer services for the purpose of high return on investment, in a very short period of time, however aiming at financial progress and sustainability.

8.) Rotating Savings and Credit Associations – where regular cylic contributions are made into a common fund (on a monthly basis) and is taken up in entirety by any one member. The cycle repeats the next month, with the amount taken up by another member. Advantages are, No interest rates, Trust-Building measure and No Over Head Costs.

How a loan is repaid provides an interesting insight into the lending practices of MFI’s. Loan Repayment Terms must include, Duration of the Loan Contract, Repayment intervals, Holiday Period (grace period). Then there are the price aspects. Interest payments. The loan terms determine both the yield on an MFI’s portfolio and the real cost to the borrower. Interest payment mechanisms use different rates according to the individual.

When the declining balance method is used, interest is computed based on the balances that remain in the borrower’s hands. As successive installments of principal are repaid, these balances decline. In this case, interest is not charged on the amount of the loan principal that the borrower has already repaid.

When the flat method is employed, interest is computed based on the original face amount of the loan rather than on the declining balances. This means that the loan is more costly to the borrower and, equivalently, that the loan generates more income for the lending institution.

Then there is the question of Effective Interest Rate or EIR:  The effective interest rate is the rate that the borrower is “really” paying, based on the amount of loan proceeds actually in the client’s hands during each period of the life of the loan. Apart from the above, some other factors that MFI’s include in their loan pricing are Administrative expenses, including rent and utilities, salaries, travel and transportation, office supplies, Inflation and depreciation, the cost of loan losses, the cost of the funds that the MFI borrows.

Despite being a “hub” of microfinance, a recent series of assessments by CRISIL in India, has indicated that over 47% of MFI’s are only at an “average” level while not a single MFI is at the “excellence” level. The “mfR4″ grading given by CRISIL for “average” is the median score and indicates “satisfactory level of management quality, governing board structure, financial performance and funding stability”. It also noted that several young MFI’s (in terms of number of years of operation) have quickly grown up the quality ladder while many other “older” MFI’s are still at lower ranks. As on March 2009, MFI’s outstanding loans have risen to 114 Billion INR, however the disbursements are also seeing a bull-run with a CAGR of 90% ! Of the 287 Billion INR distributed during the financial year 2009-2010, it is estimated that more than 180 Billion INR was disbursed by MFI’s. But with the growing demand for micro-credit and MFI’s comes the equation with more unknowns.

Access to more capital for MFI’s: MFI’s till now have predominantly been funded by government agencies and have been getting aid from a number of organizations. But as the number of people requiring Micro-Credit is increasing so is the need for capital.

Heavy Leaning on Banks and Financial Institutions: As CRISIL notes, public sector banks are not going gaga over the “Micro-Credit Phenomenon”. PSU’s argue that in a growing economy which has about 40% of its people in the lower-income group, this is expected behavior. Banks are now looking at MFI’s that have a solid lending model. Some prefer to lend only to MFI’s which have a proven track record, or there is a guarantee of repayment. With the subsidies slowly going away, MFI’s are now looking out for other sources of capital.

Absence of Regulatory Control: In 2006, the Government of India sought to bring about a legislation that would standardise the behavior of the MFI’s in the fray. As of today, balance sheets of most MFI’s are highly non-uniform and are lopsided.

Interest Rate Fluctuation: An April 1999 RBI circular instructed MFI’s to fix interest rates on the loans they give out. However, MFI’s do micro-credit based on a number of factors, political, castest and socio-economical factors as well. Given the state of operations of MFI’s and the cost of running them, most MFI’s are forced to charge high rates of interest to recover costs and to stay in business. RBI and CRISIL believe that introduction of more players in the Micro-Finance Industry will result in lowering of Interest Rates and more transparency in the process that determines the Lending Interest Rates. With grants from developed countries drying up, and related voluntary services withering up, micro-finance is a key activity in the Indian economy.

However their management has not been upto the mark. As the CRISIL report notes “the boards of these organizations continue to have strong developmental and social project bias and limited micro-finance or banking experience.” For MFI’s to function efficiently and to play a major role in the socio-economic development of the country it is necessary for them to take note of the fallacies pointed out by regulatory bodies and act on them.

Reference : INDIA – Top 50 MicroFinance Institutions – October 2009 – CRISIL report.

- Charan Hari

Ekjaa is a young institution motivated from such a vision and committed to help the society in its own way. Founded in a culturally well blended city of Hyderabad, India, we have grasped a fine understanding of the Indian society, its anticipation and prime areas of urgent focus: education, health, environment and self-sustainability. What we provide is a common platform to all the society oriented individuals and organizations to unanimously contribute towards the upliftment of every deprived section in and around. The working model of Ekjaa encapsulates the intention of generating funds for the NGOs which have established collaboration with us. The credible projects of these NGOs seeking funds for the implementation are presented on our website. Donors and lenders can understand those projects’ plausibility and decide if they are willing to support those NGOs via Ekjaa, financially.

But NGOs are one category of sailors in our mission to reach harmonic and self sustainable India which at the moment finds a cordial aroma in chunks and isolation but not as a single society. We bring bodies from diverse backgrounds together and make them socially aware and responsible so that they can support one another. This is a one stop platform, first of its kind where individuals, institutions, businesses, MFIs, SHGs and NGOs all come together to alleviate poverty, provide humanitarian support and create better future. Our bit does not end with raising funds but as a parent we care to monitor how it is being utilized for the betterment of end beneficiaries. We do not take our work just as a service or contribution instead an amalgamation of true love, honest help, knowledge and situations where people can be helped to attain gratification despite lacking the luxuries of life. The people who make a difference to such lives are not the ones with most credentials, most money or most awards; they are simply the ones who care the most with substance and not just feelings.

Ekjaa with its qualified founders and an aspiring team of youngsters has a mission; mission for every individual in society to contribute to the growth of their community & country and to enable them to live with self dignity and pride. Join us in our mission and help us achieve it. After all, there is nothing more important than a unanimous growth for a productive and prosperous society of tomorrow.

Mohnish Bagree